Image source @ Visual China
Wen | traveled by line, and the author | Zhou Xiongfei
Fast dog taxi is getting closer and closer to the gate of the Hong Kong Stock Exchange.
Recently, according to the official website of the Hong Kong Stock Exchange, Fast Dog Taxi has updated the prospectus, which is also another new move since it submitted the prospectus to the Hong Kong Stock Exchange in August last year and passed the hearing in February this year. Compared with the previous one, the updated prospectus supplements the performance data of last year's full year, which can better see the development of fast dog taxi in recent years.
According to the prospectus data, the revenue of fast dog taxi in 2021 was 661 million yuan, an increase of 24.72% year-on-year, which also changed the short decline in 2018-2019. Compared with the positive revenue, the net profit is another scenario.
In the four years from 2018 to 2021, Fast Dog Taxi has not only been in a loss, but also the net loss is in a downward trend of expanding year by year. Based on the reality of "increasing revenue without increasing profits", the listing of fast dog taxis is also regarded as a "bloody listing" in the industry.
Part of the performance of Fast Dog Taxi in 2018-2021, screenshot from the prospectus
Behind the "increase in revenue and not increase in profits", the dilemma of fast dog taxi in the freight industry in the same city is highlighted.
According to the prospectus, from 2018 to 2021, the marketing cost of Fast Dog Taxi has remained high, in other words, it has been burning money to advertise and subsidize in these years in order to compete with players such as Lalala and Didi Freight for market share.
But it turns out that after years of competition, the average monthly life of fast dog taxi in the past four years has been in decline, at the same time, its domestic market share has also fallen from the previous second in the industry to the third in the industry, with a market share of only 3.2% as of 2021.
In the face of the failure of first- and second-tier cities, the fast dog taxi has to pin its hopes on the sinking market.
Unlike the previous prospectus, Fast Dog Taxi revealed its plans to compete for the sinking market in the updated information, saying that it plans to provide services in more than 90 other lower-tier cities in The country by 2025. It should be noted that fast dog taxi has begun to lay out the sinking market in 2020, so this move is regarded by the industry as an increase in the sinking market.
It is not surprising that fast dog taxis would make such a decision. Because according to the current industry pattern of same-city freight transport, fast dog taxi has little advantage in domestic first- and second-tier cities, so focusing on the sinking market with greater potential may become a breaking point for fast dog taxi.
In addition, Fast Dog Taxi also said that the funds obtained through the listing will further increase investment in marketing, which means that it will continue to burn money to buy traffic after that, and this step may most likely match the layout of the sinking market. Can Fast Dog Taxi win its future by investing more in the sinking market?
01 "Bleeding listing" for sinking?
After the updated prospectus, Fast Dog Taxi made up for the results of the last quarter of last year.
According to the prospectus, in 2021, Fast Dog Taxi achieved revenue of 661 million yuan, compared with 24.72% year-on-year in 2020. From 2018 to 2020, fast dog taxi achieved revenue of 453 million yuan, 549 million yuan and 530 million yuan respectively.
In terms of revenue, we can see that fast dog taxi experienced a brief decline in 2019-2020 and returned to the growth track again last year. Such a phenomenon also appears in the segmentation business of fast dog taxi.
According to the prospectus, Kuaigou Taxi mainly has three major subdivided business segments of platform business, enterprise business and value-added business, and from the perspective of revenue data, these three major businesses have also experienced a decline in 2019-2020 and achieved slight growth last year.
Revenue performance of the three major segments of fast dog taxi business in 2018-2021, screenshot from the prospectus
For this revenue change, Fast Dog Taxi wrote in the prospectus that "the decline in revenue before was mainly due to the negative impact of the epidemic, coupled with fierce competition in the industry." In 2021, the negative impact of the epidemic was alleviated, and there was a growth trend. ”
While revenue is growing slowly, losses have become the norm in recent years.
In 2021, Fast Dog Taxi recorded a net loss of 873 million yuan, an increase of 32.67% compared with 2020, which is also the fourth consecutive year that it is in a loss, and the net loss of Fast Dog Taxi in 2018-2020 was 1.071 billion yuan, 184 million yuan and 658 million yuan, respectively.
In this way, although the net loss has experienced a sharp narrowing in 2019, the net loss will expand again in 2020, at the same time, in the four years from 2018 to 2021, the total loss of fast dog taxi has reached 2.786 billion yuan, almost exceeding the sum of the revenue of these four years.
In response to four consecutive years of losses, Fast Dog Taxi believed in the prospectus that it was due to the fact that its same-city logistics business was still in its infancy, and the company needed to invest a lot of money to promote business growth.
It turns out that most of this capital investment is used to invest in sales and marketing expenses.
Prospectus data shows that in 2021, Fast Dog Taxi invested 335 million yuan in sales and marketing expenses, an increase of 71.79% year-on-year, and this expense accounted for 50.7% of last year's total revenue, which shows that its capital investment in this part has accounted for "half of the total revenue".
Before 2021, fast dog taxi's investment in sales and marketing expenses will also remain high. From 2018 to 2020, the investment in this part of the expenses of Fast Dog Taxi was 524 million yuan, 296 million yuan and 195 million yuan, accounting for 115.7%, 54.0% and 36.7% of the total revenue of the year, respectively.
In addition, general and administrative costs are also the majority of the capital investment of fast dog taxi. From 2018 to 2021, this part of the expenses were 326 million yuan, 218 million yuan, 152 million yuan and 186 million yuan, accounting for 71.9%, 39.8%, 28.7% and 28.3% of the total revenue in the same year, respectively.
Although fast dog taxi has maintained a heavy investment in the above parts for many years, it has not returned to the desired results.
According to the prospectus, from 2018 to 2021, the average number of monthly active users of fast dog taxi in China was 691,000, 668,000, 495,000 and 456,000, respectively, which shows that its monthly active activity is in a downward trend year by year, and has not achieved monthly active growth.
Fast dog taxi 2018-2021 domestic average shipper monthly active user number trend, data from the prospectus, wired travel mapping
Based on the decline in monthly activity year by year and the expansion of net loss year by year, coupled with the decline in revenue that was only slightly improved last year, the cash reserves of Fast Dog Taxi are not optimistic.
The data shows that from 2018 to 2020, the cash and cash equivalents of Fast Dog Taxi were 348 million yuan, 247 million yuan and 217 million yuan respectively, which shows that its cash reserves have decreased year after year before 2021. Although this figure became 312 million yuan last year, an increase of 43.8% over 2020, it is not abundant.
The roof leaks in the rain. According to the prospectus, the debt of Fast Dog Taxi in recent years is also in the trend of continuous growth.
From 2018 to 2020, its total liabilities were 2.512 billion yuan, 2.644 billion yuan and 3.011 billion yuan, respectively, while the total liabilities reached 3.236 billion yuan last year, an increase of 7.47% over 2020, and this liability was even ten times that of last year's cash reserves.
As of 2021, the total liabilities of Fast Dog Taxi reached 3.236 billion yuan, and the total assets were 3.034 billion yuan, if calculated from the asset-liability ratio, it reached 106%, which has far exceeded the safety red line of 70%, which shows that Fast Dog Taxi has not only been heavily indebted, but also on the verge of insolvent danger.
In order to solve the crisis of no money, Fast Dog Taxi also tried to supplement it through financing. According to enterprise investigation data, it has only had three rounds of financing since 2015, the most recent financing occurred in mid-July last year, and the total of these financings is less than 2 billion yuan, facing its debt of more than 3.6 billion yuan, which can be described as a drop in the bucket.
Therefore, in the industry's view, Fast Dog Taxi will suddenly seek a Hong Kong stock listing last year, and it is also looking for a new "life-saving straw".
Fast Dog Taxi also said in the prospectus that "this time with the help of the listing mainly to supplement the supplementary funds, in order to increase user subsidies and advertising; to seek strategic cooperation, investment and acquisition, as well as technology research and development investment and daily operations." According to the Hong Kong Stock Exchange recently revealed, the valuation of Fast Dog Taxi is about 3 billion US dollars, and it will raise 400-500 million US dollars.
It is worth noting that this listing financing may also further support the "sinking" plan of fast dog taxi.
According to the prospectus, Fast Dog Taxi plans to provide services in more than 90 other lower-tier cities in China by 2025 to enhance business cooperation with existing and even more customers and drivers. This information is also the biggest highlight of the update of its prospectus.
Fast Dog Taxi Sinking Market Plan, screenshot from prospectus
The layout of the sinking market is not new for fast dog taxis. In 2020, Fast Dog Taxi began to establish partnerships with individuals and entities in lower-tier cities, and tried to expand in the sinking market by recruiting shippers and drivers.
This also means that although Fast Dog Taxi is currently trying to solve the danger of lack of money and insolvency through "bloody listing", it will also continue to further increase the size of this business on the basis of the existing layout of the sinking market in 2020.
Behind such seemingly "broken boats" action, it actually reveals the current dilemma of fast dog taxi in the industry.
02 Hard fast dog taxi
The share of fast dog taxi in the same city freight market is not much left.
In the prospectus, Fast Dog Taxi describes it as follows: "If you measure the total transaction volume in 2021, it is the third largest online logistics platform in China, with a market share of 3.2% (ranking after the participants with market shares of 52.8% and 5.5%)). ”
If combined with its annotation description in the prospectus, it can be known that the player who ranks first in the domestic same-city freight track with a market share of 52.8% is Lala, and it is Didi Freight that ranks second in the industry with a market share of 5.5%.
The market share of Fast Dog Taxi, screenshot from the prospectus
It is worth noting that in the domestic same-city freight track in 2020, the market share of fast dog taxi is 5.5%, although there is a big gap with Lala, which ranks first with a market share of 54.7%, but it still barely retains the second position in the industry.
As everyone knows, after a year of development, Fast Dog Taxi not only did not catch up with the goods Lala, but also was surpassed by Didi Freight and fell into the embarrassing situation of the third in the industry.
In such an unfavorable situation, the fast dog taxi may recall the days when it was on a par with Lalala.
In 2014, the domestic market blew up a wave of "Internet + car" car manufacturing, "Internet + same city freight" business model also began to rise, in this market driven, Lalala was soon born, 58 City Group also laid out its own same city express business (the predecessor of fast dog taxi).
In addition, enterprises such as the No. 1 truck have also been established, and more than 300 companies have been crowded on the entire freight track in the same city for a time.
As with all industries, the same-city freight industry doesn't need too many players to share the cake together.
Just after the establishment of Lala and 58 Express, they quickly got the "ammunition" of financing, and then began their own rapid expansion. In 2017, the former's order volume exceeded 100,000 orders, and its business scope covered many domestic cities such as Beijing, Shanghai, Foshan, Huizhou, Zhongshan and Nanjing.
In contrast, 58 Express, according to the official introduction at that time, also achieved business coverage in 339 cities in China in the same year, with a single-day peak order exceeding 400,000 orders, the platform has a total of 500,000 active drivers, and a cumulative service user of more than 30 million.
At the same time as the rapid expansion of cargo lala and 58 express transportation, the entire domestic freight industry in the same city has also opened a "hundred regiments war". According to media reports such as 36Kr, by 2017, there were two major players left on the freight track in the same city, Lala and 58 Express.
In order to eliminate Lala, 58 Express not only reached a merger agreement with the Southeast Asian freight and logistics platform Fast Dog Express ("GOGOVAN") in September 2017, further increasing its strength, but also upgraded its brand in 2018, changing the brand name from "58 Express" to "Fast Dog Taxi", and deepening consumer awareness of it through big advertising.
For this point, from the sales and marketing expense data disclosed by Fast Dog Taxi, it can be seen that compared with the capital investment in this regard in 2019-2021, 2018 can be described as the most.
In the face of the offensive of 58 Express, Lala, who completed Series B and C financing in 2017, also took action. In those two years, not only through subsidies to attract drivers to join, but also by reducing freight rates to increase the monthly active and user volume on the platform.
The results proved that the brand-upgraded fast dog taxi still did not threaten lala. According to the report data released by Fastdata, from January to April 2019, the market share of Lalala and Fast Dog Taxi was 53.6% and 24.6%, respectively. That said, the market share of both has accounted for 80% of the entire industry.
Market share of domestic same-city freight in China from January to April 2019, source of "China Same-city Freight Online Ride-hailing Trend Report in the First Half of 2019"
Just when people think that the competitive pattern of the domestic same-city freight industry is stable, with the entry of giant players such as Didi Freight, the war in this industry has been ignited again.
In April 2020, Didi invested 100 million yuan to establish Didi Freight, officially entering the same city freight track. Didi, who is well versed in the price war, opened a subsidy war as soon as it entered.
On the driver's side, as long as you register the APP, you can get 50 yuan in red envelopes, and you can get 200 yuan in red envelopes for new people to register drivers. After registration, by participating in various activities, drivers can get subsidy incentives ranging from 80-300 yuan per day; on the user side, Didi Freight has also launched "the first single penny" and "4030% off coupons" and other discounts.
In the face of the overall situation of Didi Freight, Lalala took the lead in making countermeasures. On the driver side, Lalala launched a single penny brushing activity in 2020, and also relaxed the requirements for drivers, and those who do not have a vehicle can also register and provide vehicles; for the user side, they have also launched "1 cent delivery voucher" and 50% off monthly card and other offers, which can be described as a step by step benchmark Didi freight.
Although compared with the cargo Lala, the fast dog taxi is weaker, but in the face of the offensive of Didi Freight, it has also launched a single reward of 20 yuan for the driver side; for the user side, it has also launched "99 minus 10", "338 minus 30", "1288 minus 100" and other offers.
In addition to the subsidy war, the wars of various families are also displayed on the labels.
Simply put, when the driver registers a platform, the platform will require the corresponding platform logo or slogan sticker to be posted on the operating vehicle, on the one hand, to avoid the driver to take over the business of other platforms, on the other hand, but also for the better dissemination of the brand.
In order to promote drivers to do this, for example, Didi Freight will give drivers a 700 yuan OEM subsidy every six months, but will be fined 200 yuan after finding it without tearing it up. According to the understanding of wired travel, cargo lala and fast dog taxi also have corresponding requirements and punishment mechanisms.
The requirements of the fast dog taxi on the sticker, screenshot from the fast dog taxi driver version APP
Facts have proved that after more than a year of subsidy wars and OEM battles, didi Freight, a new player, successfully defeated the old player of Fast Dog Taxi and sat in the second place in the entire industry in 2021; while the weaker Fast Dog Taxi could only succumb to Lala and Didi Freight, and its market share decreased again.
Nowadays, for Fast Dog Taxi, it not only needs to bear the dual pressure of declining market share and insolvency, but also needs to face the catch-up of new entrants such as Manbang Group and SF in the past two years. In such a dilemma, fast dog taxi can only pin its future on the sinking market.
03 Going deep into the fourth and fifth-tier cities, can fast dogs have a future?
It is not surprising that fast dog taxis will be optimistic about the sinking market.
According to the statistics of Zhiyan data, the market size of the domestic same-city freight industry has shown a trend of increasing year by year, from 710 billion yuan in 2013 to 1273.2 billion yuan in 2019, with a compound annual growth rate of 10.22%. They also said that in the next 3-5 years, the industry is expected to maintain a growth rate of 4%-7%, and the market size will exceed 1.6 trillion yuan in 2026.
However, in the view of Zhang Xiang, a special expert of the China Bo Lian Think Tank, since the development of 2014, although the scale of the entire industry is still growing, the market in the first and second tier cities has become saturated, and the sinking market represented by the third and fourth tier cities has not been fully developed, and there is still great growth potential.
In 2020, Lalala publicly stated that as of 2018, it has basically completed the business coverage of first- and second-tier cities, and then it will penetrate into cities such as fourth- and fifth-tier cities in order to open up more sinking markets.
The voice just dropped. At the end of that year, Lalala not only announced that it had completed a $515 million Series E financing, but also said that the financing would mainly be used to expand the sinking market. Zhou Shengfu, founder and CEO of Lalala, also said at that time that the expansion of the market will continue to accelerate, especially the expansion of the sinking market of the fourth and fifth lines.
Some of the financing details of Lalala, screenshot from the love of the enterprise check
In May 2021, Lalala announced that the business scope of cross-city large trucks has covered 116 domestic cities, including all first- and second-tier logistics nodes, of which 23 cities have been stationed in the third- and fourth-tier sinking markets. It is expected that the business will penetrate into 179 cities within the year, forming a network covering basic node cities across the country.
From this point of view, although Kuaigou Taxi has begun to lay out the sinking market in 2020, at the same time, Lalala is also doing the same action. So in the industry's view, even if the fast dog taxi is currently ready to increase the sinking market, but the future will still be with the goods Lala in the sinking market "close hand-to-hand combat", whether it can achieve an advantage is still an unknown.
In addition to the challenges of other players in the industry, fast dog taxi will also encounter the risk of market adaptability in the sinking market.
"Unlike first- and second-tier cities, although the sinking market of the third, fourth, and fifth lines has great potential for the development of freight in the same city, it cannot be avoided that because business like freight generally occurs in the network of acquaintances, there are more sinking markets on platforms such as fast dog taxi, and whether consumers in these markets can adapt to third-party platforms to transport goods still needs time to test." Logistics industry expert Yang Daqing said this to Sina Technology.
Zhang Xiang also said that although there is a certain market for same-city freight, it does not have a strong demand like online ride-hailing, so when the business sinks, it cannot guarantee whether the overall demand of these markets can be fully utilized.
In response to this risk, Fast Dog Taxi also wrote in the prospectus that "as the business continues to grow and the service continues to expand, it may face challenges in achieving a satisfactory user experience at scale, which may adversely affect the ability to attract and retain users, resulting in adverse effects on the business, operating results and financial condition." ”
The safety and compliance of same-city freight will also become another major risk factor for the development of fast dog taxis.
In February last year, the "Fatality of a Female Passenger crash in Lala" exposed the safety of the same-city freight platform to the spotlight. After the incident, Lalala admitted that there were problems such as lack of safety warnings, imperfect product safety functions and slow follow-up, and announced the rectification work plan.
Although the platform involved is Lala, after this, platforms such as Fast Dog Taxi have successively upgraded platform safety and security measures: including but not limited to launching the in-car recording function, and promoting intelligent driving recorders in pilot cities to avoid similar incidents.
Two months later, the Shanghai Municipal Transportation Commission Law Enforcement Corps and other departments conducted joint interviews with online freight platforms such as Lala and Kuaigou Taxi, requiring all online freight platforms to implement five aspects: offline real-life vehicle verification, prohibition of providing dangerous goods transportation matching business, timely provision of registration and operation data, setting up full-time safety emergency liaison officers, and timely reporting of violations or accidents for registered vehicles on the platform.
In addition to external risks such as industry competition, consumer use differences and intensified supervision, the internal risks of fast dog taxi also affect the layout of the sinking market.
According to the prospectus, the gross profit margin of Fast Dog Taxi in 2018-2020 was 23%, 31.6% and 34.6%, respectively, which is in a state of annual growth, and this growth of Fast Dog Taxi is explained as due to its commission rate for domestic and overseas drivers is also increasing year by year, from 1.9% and 4.2% in 2018 to 8.3% and 8.1% in 2020.
For the annual increase in the commission, many drivers are bitter. In the face of this situation, last year, China's Ministry of Communications restricted the commission problem of the same-city freight platform by introducing relevant regulations, so that the net commission rate of fast dog taxi in China was reduced to 2.6% that year, while overseas due to the lack of relevant restrictions, its net commission rate continued to rise to 9.1%.
2018-2021 fast dog taxi net commission rate and gross profit margin change trend, data from the prospectus, wired travel mapping
Although the domestic commission declined, based on the continuously high net commission rate overseas, the overall gross profit margin of Fast Dog Taxi last year still rose, reaching 36.6%. However, in the view of Zhang Junyi, a senior expert in the field of travel, the high gross profit margin of Fast Dog Taxi is mainly to give investors confidence, but if it is only to achieve this purpose by simply increasing the commission on drivers, this may be an unsustainable practice in itself.
In addition to the gross profit margin problem, the difficulty of profitability is also a big hidden danger.
In terms of the risk factors of the prospectus, Kuaigou Taxi mentioned that "since its inception, it has generated significant losses and may not be able to achieve profitability in the short term". At the same time, it also said that since the same-city logistics business is still in its early stages, the company has made a lot of investment to drive business growth, and considering the business investment plan, it is expected to continue to generate losses until at least 2024.
As a result, even if Fast Dog Taxi takes the money raised from this listing to pay off the debt, the subsequent losses still cannot support its layout of the sinking market.
Based on the above analysis, in the industry's view, Fast Dog Taxi is ready to further increase the sinking market, but it is not easy to really go through the sinking market and improve its current predicament.
Perhaps Fast Dog Taxi is also aware of this fact, in addition to the sinking market, it also prepared Plan B.
Fast Dog Taxi has not given up its layout of first- and second-tier cities at present. After downloading the Fast Dog Taxi User Edition and the Driver Edition APP, after obtaining the positioning, you can see that in the Fast Dog Taxi User Edition, it is still for new users in Hangzhou to launch coupons of 1 yuan minus 10 yuan and 9.5% discount, as well as preferential activities such as "preferential packages, limited time seconds" and "invite friends to help, move to save 100 yuan" and other preferential activities.
In the driver version, Fast Dog Taxi also launched a new reward of "inviting friends to get cash" within the scope of Hangzhou, that is, inviting an unregistered new driver to reward 200 yuan, and inviting a registered unpaid driver to reward 50 yuan.
Fast Dog Taxi Driver And User Side Offers and Rewards Activities, screenshot from Fast Dog Taxi APP
In addition, fast dog taxi will become more dependent on overseas markets in the future. According to the prospectus, while the growth rate of kuaigou taxi's domestic business revenue has slowed down in recent years, its business revenue in overseas markets has achieved year-on-year growth, whether it is platform business, enterprise business and value-added business.
Because of this, Fast Dog Taxi also said in the prospectus that "the total amount of consignment orders in overseas markets has increased, mainly due to the increase in online penetration of the same-city logistics market in Asia and the strong demand for logistics services." ”
In this regard, although it is necessary to determine whether the fast dog taxi can help it improve its plight with the help of the sinking market with the help of the increased size, it also depends on its subsequent performance. But what is certain is that all this is based on the fact that fast dog taxi can successfully land on the Hong Kong Stock Exchange, after all, it cannot go to the market, cannot raise money, and no matter how many plans are empty words.